UK June borrowing falls below forecasts, Healey pledges fiscal buffer
7 reported
The UK government borrowed less than expected in June, according to the Office for National Statistics, providing a boost for Prime Minister Andy Burnham as he announced a VAT cut on household electricity bills. Public sector net borrowing was £16bn last month, £7.9bn less than in June 2025 and £300m below the Office for Budget Responsibility forecast, largely due to lower inflation-linked debt interest costs. Chancellor John Healey said he and Burnham had agreed to “work in lockstep to meet the fiscal rules with a buffer against uncertainty” while cutting the cost of living. Healey stated that the VAT removal on domestic electricity bills from 1 October would be funded this year by cancelling the digital ID programme. The ONS reported debt interest payments reached £11.8bn in June, £5.3bn lower than a year earlier but still the fourth highest June on record. Borrowing for the financial year to date was £57.6bn, £3.7bn less than the same period last year but £2.7bn above the OBR forecast. Economists from PwC UK and Capital Economics noted that limited fiscal headroom could force difficult trade-offs for the new government.
What’s reported
UK public sector net borrowing in June was £16bn, £7.9bn less than June 2025.
The figure was £300m below the OBR forecast, due to lower inflation-linked debt interest costs.
Prime Minister Andy Burnham announced removal of VAT on domestic electricity bills from 1 October.
Chancellor John Healey said the cut would be funded by cancelling the digital ID programme.
Debt interest payments in June were £11.8bn, £5.3bn lower than a year earlier but the fourth highest June on record.
Borrowing for the financial year to date was £57.6bn, £3.7bn less than last year but £2.7bn above the OBR forecast.
Economists warned of limited fiscal headroom and potential difficult trade-offs.
Key figures
Andy Burnham, UK Prime Minister
John Healey, Chancellor of the Exchequer
Nabil Taleb, economist at PwC UK
Ruth Gregory, deputy chief UK economist at Capital Economics
Sources: The Guardian
